Kyle Bass is slamming the group blocking his new, big short strategy

J. Kyle Bass is on a
crusade against drugmakers and their "BS
patents."Reuters/ Brendan
McDermid

Hedge fund manager J. Kyle Bass slammed US Patent and Trademark
Office, after it blocked his attempt to challenge a patent held
by drugmaker Biogen.

The Patent Trial and Appeal Board, part of the
USPTO, said Tuesday that it was denying
Bass' petition to review a patent for a
multiple sclerosis drug licensed
byBiogen.

"It appears to me, after the Biogen ruling, that Michelle Lee and
the US Patent and Trademark Office are running a kangaroo court,"
Bass told Business Insider in a phone call Thursday.

Lee is the head of USPTO, and a former deputy general
counsel for Google. During her time at
Google, the
company played a role in lobbying
for the America Invents Act to be passed, the law
which permits pretty much anyone to file
an
IPRchallenging a patent.

That's exactly what Bass did, alongside a bet that Biogen's
stock would fall if it lost the patent protection.

"Kangaroo court" is a term for an unofficial
or biased judicial proceeding that leads to a harsh
punishment.

'Activist short strategy'

Since the beginning of the year, Bass has been
filing inter-partes-review petitions against numerous
drugmakers' patents while also betting against their stocks.

It's all part of an "activist short strategy" that Bass thinks
will end what he considers to be "pay for delay" agreements that
stop lower-cost generic drug competitors from entering the
market.

To do this, he formed the Coalition for Affordable
Drugs, and the group has now filed morethan two
dozenIPR petitions with the
USPTO. He even set up a separate investment vehicle at Hayman
Capital.

The early results don't bode well for Bass,
however. The IPR against Biogen was denied over
an issue with something called "prior art" — it's a
pretty difficult concept to grasp, but you
can read a great explanation here.

US patent attorney Gene Quinn, publisher of the
site IPWatchdog, told Business Insider that the Biogen call
was an "embarrassing" decision.

"It leads to the possibility of arbitrary treatment," Quinn said.
"I think this case with Biogen is a perfect example that the
board got so many things fundamentally wrong. This begs to be
reviewed."

The two Acorda IPRs were tossed out on a technicality; Bass
refiled those petitions.

"The problem is they are going into the weeds to find
whatever reason to say no to this guy," Quinn said.

Quinn said that the PTAB has a reputation for killing
patents, and that it is not a patent-friendly board. That made it
a surprise that Bass' IPRs were rejected.

He said, "He's 0-3. If he winds up going 0-16, we have to
sit down and say something is up."

'Stick to calling balls and strikes'

Michelle
Lee.USPTO

The rejected IPRs set a worrying precedent for the strategy.
What's perhaps the most troubling for Bass is the USPTO hasn't
heard the merits of any of his arguments.

"Michelle Lee should stick to calling balls and strikes as
Congress legislated her to do through the America Invents Act.
And she should stop forwarding her political agenda and ignoring
the law," Bass told BI.

A USPTO representative said in response to Bass'
comments that it "does not comment on Patent
Trial and Appeal Board cases."

We sent an email to Lee seeking comment, but she didn't reply in
time for publication.

Bass isn't backing down in his
crusade against the pharmaceutical
industry. In fact, he's doubling-down.